You can still find a cost-effective stock broker to help you purchase shares.
In today’s technologically connected world, the days of needing a real-life stockbroker to buy and sell shares on the stock exchange for you are long gone. It’s now quicker, easier and cheaper than ever before for Australians to buy and sell shares on the Australian Securities Exchange (ASX) and myriad international exchanges via online stock brokers, but that doesn’t mean it’s free.
You’ll still need to pay a brokerage fee whenever you place a trade to buy or sell shares, so it’s worth your while to shop around for the online share trading platform that offers the cheapest brokerage fees.
But which online share trading platforms offer the cheapest brokerage? Read on to find out.
What are brokerage fees?
A brokerage fee is the fee your stockbroker charges for executing a buy or sell transaction. In other words, every time you buy or sell shares through your online share trading account, you’ll need to pay a specific amount to the broker for the privilege of using its services. This fee is based on the size or value of the trade, and could be a flat fee or an amount calculated as a percentage of the transaction value.
Brokerage fees are one of the largest expenses associated with online share trading and can have a big impact on the affordability of your investments. If you’re a frequent trader and you’re paying a brokerage fee of $30 every time you buy or sell a parcel of shares, this can quickly add up to a substantial amount and eat away at your trading profits.
That’s why it’s essential for anyone thinking of getting started in the sharemarket to compare brokerage fees charged by online share trading platforms and shop around for the cheapest option.
How much will I need to pay for stock brokerage?
Brokerage fees are far from identical from one provider to the next, so it’s important to compare the fees imposed by different share trading platforms before you open an account. Some providers have simple fee structures and others have quite complex arrangements, but charges usually vary based on the size or value of the trade. Different brokerage fees often also apply to phone trades and other unique trading options, so it’s worth reading the fine print to find out how much extra you’ll have to hand over every time you make a trade.
The table below features a guide to the brokerage fees charged by some of Australia’s leading online share trading providers when buying and selling shares on the ASX. Compare those fees to find out which provider offers the cheapest stock brokerage.
|Broker||Online fee||Phone fee|
|Westpac Online Investing||$19.95 or $0.11 (whichever is greater)||$59.90 or 0.44% (whichever is greater)|
|nabtrade||$59.95 or 0.55% (whichever is greater)|
|ANZ Share Investing||First trade each month:|
Second and subsequent trades each month:
|BellDirect||$60 or 0.2%, whichever is greater|
|Capital19||$0.15 of trade value ($15 minimum fee)||0.15% of trade value ($15 minimum fee)|
|FP Markets||$0.11 (minimum charge of $14.95)||0.11% (minimum charge of $14.95)|
|HSBC Online Share Trading||$19.95 (trades up to $20,000)$0.11 (trades $20,000-plus)||$60 or 0.2%, whichever is greater|
|IG Share Trading||$8 or 0.1%, whichever is greater||$50|
|Macquarie Online Trading||19.95 or 0.12%, whichever is greater||$49.95 or 0.30%, whichever is greater|
Which provider offers the cheapest brokerage?
The online share trading platform offering the cheapest brokerage would depend on the value of your trade, how many trades you place each month and whether or not you place phone orders. For example, place a trade of $3,000 with ANZ and the brokerage fee of $19.95 is the same as that charged by CommSec. But if you were to place a trade of $30,000 with the same two providers, ANZ would charge $33 brokerage and CommSec would charge $36.
With this in mind, it’s important to consider your trading habits when comparing brokers, as this can have a huge impact on the cost of each transaction. You’ll need to take into account not only how often you trade but also the size of the trades you place. If you like the convenience of placing trades over the phone, you may also want to look for a provider that doesn’t charge extra for phone orders.
It’s also important to point out that, from time to time, some online share trading providers will offer special deals to help you save on brokerage fees or possibly avoid them altogether. For example, new customers who signed up for a CommSec share trading account at the time of writing could take advantage of $600 free brokerage.
Other providers also offer brokerage fee rebates for frequent traders. For example, if an account holder makes more than a certain number of trades per month, such as 30, all the brokerage fees payable for those trades may be refunded to their trading account at the end of the month. Discounts may also apply to higher-value trades, so consider your trading habits when comparing special offers from online share platforms.
Such offers can help you improve your bottom line when trading shares online, so it’s worth keeping an eye out for any brokerage deals and discounts.
Are there any other fees when trading shares?
While brokerage fees are the major cost you need to consider when comparing share trading platforms, you should also be aware that other fees may apply. For example, you may need to pay a monthly fee to become a premium member of a share trading platform. This could allow you to access dynamic market data, the latest market news and analysis, or perhaps stock research and recommendations.
Read the terms and conditions of an online stock broking platform to find out what those ongoing fees are and how they will affect you.
Search and compare share brokers
How do I compare cheap stock brokers?
As well as brokerage fees, there are several other features you should compare when choosing an online share trading platform, including:
It’s also important to compare whether there are any ongoing fees you will need to pay to maintain your account, such as a monthly management fee or a fee to allow you to access dynamic market data. Also check whether special options such as stop loss orders or phone trades attract extra fees.
Compare the number of global markets each platform allows you to access to buy and sell shares. In addition to the ASX, many providers also allow you to trade on stock exchanges in New York, London, Tokyo and many other countries around the world.
In the fast-paced world of share trading, accessing up-to-date market data could be critical to the success of your trades. Check whether you will be able to access static, live, dynamic or real-time data, and whether this attracts any extra fees.
Compare the options each provider offers for placing buy and sell orders. Can you place limit and market orders? Are stop loss orders available to help you minimise investment losses?
Ease of use
Try out any share trading platform you are considering using to work out how easy it is to use on a daily basis. Most providers offer free demo accounts to help you sample their services.
As well as an online platform, can you place trades over the phone or on the go using a smartphone or tablet app? Also consider whether the trading system is a web-based platform or whether it requires you to download any software.
By considering all of the above factors, you should be able to find the best, cheap stockbroker for your online share trading needs.